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Many people have interpreted Gordon Brown’s comments prior to the referendum, as well as the so called “Vow” made in the Daily Record, as some commitment so “Devo Max”. My submission to The Smith Commission on further devolution for Scotland assumes that we are indeed aiming for the maximum level of devolution possible, and asks where this must fall short of the common understanding of Devo Max.

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Scotland has limited lender of last resort options in an informal currency union

If an independent Scotland chooses an informal currency union (called ‘dollarization’ or 'sterlingization') as Plan B, its financial institutions cannot be sure they will have access to emergency liquidity in the next financial crisis. This is likely to have important consequences for Scotland’s financial sector, and therefore its capacity to export financial services, its new balance of payments and general economic prosperity.   

It is clear talking to voters around Scotland that they have real difficulties in putting the claims of both sides in the referendum debate into perspective. Those claims are often very different and generally contradictory. To mark the countdown as we hit 100 days before the referendum, we launch the first part of our response to this in the form of our Guide to the Issues.

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Monetary Unions and Fiscal Constraints

New research by Dr A. Armstrong and Dr M. Ebell of NIESR entitled “Monetary Unions and Fiscal Constraints”, published in the National Institute Economic Review, 228, May 2014
 

Guest blogger Ronald MacDonald of the University of Glasgow examines Scotland's currency options.

The recent decision by all of the major unionist parties to rule out an independent Scotland participating in a sterling monetary union has created much political heat. So much so, that there is a danger that the light of the underlying economics will be extinguished in the maelstrom. As an economist, and a specialist in currency regimes, I think it is wise to return to the basic economics of this issue lest some costly mistakes are made for both Scotland and the rest of the UK.

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